An interesting trend - what swings, swings back

From the Seattle Times:

Consumers' taste for organic is tapering off
Whole Foods Market, a showcase for the natural and organic industries, is struggling through the toughest stretch in its history. And the organic industry is starting to show signs that a decadelong sales boom may be ending.

Once upon a time, sales of organic and natural products were growing in double digits most years. Enthusiastic grocers and venture capitalists prowled the halls of trade shows looking for the next big thing. Grass-fed beef? Organic baby food? Gluten-free energy bars?

But now, shaky consumer spending is dampening the mood. It turns out that when times are tough, consumers may be less interested in what type of feed a cow ate before it was chopped up for dinner or whether carrots were grown without chemical fertilizers, particularly if those products cost twice as much as the conventional stuff.

Whole Foods Market, a showcase for the natural and organic industries, is struggling through the toughest stretch in its history. And the organic industry is starting to show signs that a decadelong sales boom may be ending.

The sales volume of organic products, which had been growing at 20 percent a year in recent years, slowed to a much lower growth rate in the past few months, according to Nielsen, a market-research firm. For the four weeks that ended Oct. 4, the volume of organic products sold rose just 4 percent compared with the same period a year earlier.

"Organics continue to grow and outpace many categories," Nielsen concluded in an October report. "However, recent weeks are showing slower growths, possibly a start of an organics growth plateau."

If the slowdown continues, it could have broad implications beyond the organic industry, whose success spawned a growing number of products with values-based marketing claims, from fair-trade coffee to hormone-free beef to humanely raised chickens. Nearly all command a premium price.

There will always be shakeouts with any new product line and, quite honestly, a lot of the boutique "organic" food products taste like crap. I have had some carob brownies that I wouldn't even use to patch asphalt, let alone consider eating again. The companies who take their time and grow slowly will succeed. The companies who leverage themselves and take out all sorts of business loans to get bigger will collapse under their own debt. This has been true forever -- just because you have market growth now doesn't mean that you will have that forever.

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About this Entry

This page contains a single entry by DaveH published on November 2, 2008 11:42 AM.

Knew it had to happen - drinkable cigarettes was the previous entry in this blog.

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